Medicare Benefit Policy Manual Chapter 7 - Home Health Services

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1 Medicare Benefit Policy Manual Chapter 7 - Home Health Services Transmittals for Chapter 7 Table of Contents (Rev. 179, ) 10 - Home Health Prospective Payment System (PPS) National 60-Day Episode Rate Adjustments to the 60-Day Episode Rates Continuous 60-Day Episode Recertification Counting 60-Day Episodes Split Percentage Payment Approach to the 60-Day Episode Physician Signature Requirements for the Split Percentage Payments Low Utilization Payment Adjustment (LUPA) Partial Episode Payment (PEP) Adjustment Outlier Payments Discharge Issues Consolidated Billing Change of Ownership Relationship to Episodes Under PPS 20 - Conditions To Be Met for Coverage of Home Health Services Reasonable and Necessary Services Background Determination of Coverage Impact of Other Available Caregivers and Other Available Coverage on Medicare Coverage of Home Health Services Use of Utilization Screens and "Rules of Thumb" 30 - Conditions Patient Must Meet to Qualify for Coverage of Home Health Services Confined to the Home Patient Confined to the Home Patient's Place of Residence Services Are Provided Under a Plan of Care Established and Approved by a Physician

2 Content of the Plan of Care Specificity of Orders Who Signs the Plan of Care Timeliness of Signature Use of Oral (Verbal) Orders Frequency of Review of the Plan of Care Facsimile Signatures Alternative Signatures Termination of the Plan of Care - Qualifying Services Sequence of Qualifying Services and Other Medicare Covered Home Health Services Under the Care of a Physician Needs Skilled Nursing Care on an Intermittent Basis (Other than Solely Venipuncture for the Purposes of Obtaining a Blood Sample), Physical Therapy, Speech-Language Pathology Services, or Has Continued Need for Occupational Therapy Physician Certification Content of the Physician Certification Face-to-Face Encounter Periodic Recertification Who May Sign the Certification 40 - Covered Services Under a Qualifying Home Health Plan of Care Skilled Nursing Care General Principles Governing Reasonable and Necessary Skilled Nursing Care Application of the Principles to Skilled Nursing Services Observation and Assessment of the Patient's Condition When Only the Specialized Skills of a Medical Professional Can Determine Patient's Status Management and Evaluation of a Patient Care Plan Teaching and Training Activities Administration of Medications Tube Feedings Nasopharyngeal and Tracheostomy Aspiration

3 Catheters Wound Care Ostomy Care Heat Treatments Medical Gases Rehabilitation Nursing Venipuncture Student Nurse Visits Psychiatric Evaluation, Therapy, and Teaching Intermittent Skilled Nursing Care Skilled Therapy Services General Principles Governing Reasonable and Necessary Physical Therapy, Speech-Language Pathology Services, and Occupational Therapy Application of the Principles to Physical Therapy Services Application of the General Principles to Speech-Language Pathology Services Application of the General Principles to Occupational Therapy Assessment Planning, Implementing, and Supervision of Therapeutic Programs Illustration of Covered Services 50 - Coverage of Other Home Health Services Skilled Nursing, Physical Therapy, Speech-Language Pathology Services, and Occupational Therapy Home Health Aide Services Medical Social Services Medical Supplies (Except for Drugs and Biologicals Other Than Covered Osteoporosis Drugs) and the Use of Durable Medical Equipment Medical Supplies The Law, Routine and Nonroutine Medical Supplies, and the Patient's Plan of Care Routine Supplies (Nonreportable) Nonroutine Supplies (Reportable) Durable Medical Equipment

4 Covered Osteoporosis Drugs Services of Interns and Residents Outpatient Services Part-Time or Intermittent Home Health Aide and Skilled Nursing Services Impact on Care Provided in Excess of "Intermittent" or "Part- Time" Care Application of this Policy Revision 60 - Special Conditions for Coverage of Home Health Services Under Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) Post-Institutional Home Health Services Furnished During A Home Health Benefit Period - Beneficiaries Enrolled in Part A and Part B Beneficiaries Who Are Enrolled in Part A and Part B, but Do Not Meet Threshold for Post-Institutional Home Health Services Beneficiaries Who Are Part A Only or Part B Only Coinsurance, Copayments, and Deductibles 70 - Duration of Home Health Services Number of Home Health Visits Under Supplementary Medical Insurance (Part B) Counting Visits Under the Hospital and Medical Plans 80 - Specific Exclusions From Coverage as Home Health Services Drugs and Biologicals Transportation Services That Would Not Be Covered as Inpatient Services Housekeeping Services Services Covered Under End Stage Renal Disease (ESRD) Program Prosthetic Devices Medical Social Services Furnished to Family Members Respiratory Care Services Dietary and Nutrition Personnel 90 - Medical and Other Health Services Furnished by Home Health Agencies Physician Certification for Medical and Other Health Services Furnished by Home Health Agency (HHA) Use of Telehealth in Delivery of Home Health Services

5 10 - Home Health Prospective Payment System (PPS) HH-201 The unit of payment under home health PPS is a national 60-day episode rate with applicable adjustments. The episodes, rate, and adjustments to the rates are detailed in the following sections National 60-Day Episode Rate HH A. Services Included The law requires the 60-day episode to include all covered home health services, including medical supplies, paid on a reasonable cost basis. That means the 60-day episode rate includes costs for the six home health disciplines and the costs for routine and nonroutine medical supplies. The six home health disciplines included in the 60-day episode rate are: 1. Skilled nursing services 2. Home health aide services; 3. Physical therapy; 4. Speech-language pathology services; 5. Occupational therapy services; and 6. Medical social services. The 60-day episode rate also includes amounts for: 1. Nonroutine medical supplies and therapies that could have been unbundled to part B prior to PPS. See C for those services; 2. Ongoing reporting costs associated with the outcome and assessment information set (OASIS); and 3. A one time first year of PPS cost adjustment reflecting implementation costs associated with the revised OASIS assessment schedules needed to classify patients into appropriate case-mix categories. B. Excluded Services

6 The law specifically excludes durable medical equipment from the 60-day episode rate and consolidated billing requirements. DME continues to be paid on the fee schedule outside of the PPS rate. The osteoporosis drug (injectable calcitonin), which is covered where a woman is postmenopausal and has a bone fracture. This drug is also excluded from the 60-day episode rate but must be billed by the home health agency (HHA) while a patient is under a home health plan of care since the law requires consolidated billing of osteoporosis drugs. The osteoporosis drug continues to be paid on a reasonable cost basis Adjustments to the 60-Day Episode Rates HH A. Case-Mix Adjustment A case-mix methodology adjusts payment rates based on characteristics of the patient and his/her corresponding resource needs (e.g., diagnosis, clinical factors, functional factors, service needs). The 60-day episode rates are adjusted by case-mix methodology based on data elements from the OASIS. The data elements of the case-mix adjustment methodology are organized into three dimensions to capture clinical severity factors, functional severity factors, and service utilization factors influencing case mix. In the clinical, functional, and service utilization dimensions, each data element is assigned a score value. The scores are summed to determine the patient's case-mix group. B. Labor Adjustments The labor portion of the 60-day episode rates is adjusted to reflect the wage index based on the site of service of the beneficiary. The beneficiary's location is the determining factor for the labor adjustment. The home health PPS rates are adjusted by the pre-floor and pre-reclassified hospital wage index. The hospital wage index is adjusted to account for the geographic reclassification of hospitals in accordance with 1886(d)(8)(B) and 1886(d)(10) of the Social Security Act (the Act.) According to the law, geographic reclassification only applies to hospitals. Additionally, the hospital wage index has specific floors that are required by law. Because these reclassifications and floors do not apply to HHAs, the home health rates are adjusted by the pre-floor and pre-reclassified hospital wage index. NOTE: The pre-floor and pre-reclassified hospital wage index varies slightly from the numbers published in the Medicare inpatient hospital PPS regulation that reflects the floor and reclassification adjustments. The wage indices published in the home health final rule and subsequent annual updates reflect the most recent available pre-floor and pre-reclassified hospital wage index available at the time of publication Continuous 60-Day Episode Recertification

7 HH Home health PPS permits continuous episode recertifications for patients who continue to be eligible for the home health benefit. Medicare does not limit the number of continuous episode recertifications for beneficiaries who continue to be eligible for the home health benefit Counting 60-Day Episodes HH A. Initial Episodes The "From" date for the initial certification must match the start of care (SOC) date, which is the first billable visit date for the 60-day episode. The "To" date is up to and including the last day of the episode which is not the first day of the subsequent episode. The "To" date can be up to, but never exceed a total of 60 days that includes the SOC date plus 59 days. B. Subsequent Episodes If a patient continues to be eligible for the home health benefit, the home health PPS permits continuous episode recertifications. At the end of the 60-day episode, a decision must be made whether or not to recertify the patient for a subsequent 60-day episode. An eligible beneficiary who qualifies for a subsequent 60-day episode would start the subsequent 60-day episode on day 61. The "From" date for the first subsequent episode is day 61 up to including day 120. The "To" date for the subsequent episode in this example can be up to, but never exceed a total of 60 days that includes day 61 plus 59 days. Note that the certification or recertification visit can be done during a prior episode Split Percentage Payment Approach to the 60-Day Episode HH In order to ensure adequate cash flow to HHAs, the home health PPS has set forth a split percentage payment approach to the 60-day episode. The split percentage occurs through the request for anticipated payment (RAP) at the start of the episode and the final claim at the end of the episode. For initial episodes, there will be a 60/40 split percentage payment. An initial percentage payment of 60 percent of the episode will be paid at the beginning of the episode and a final percentage payment of 40 percent will be paid at the end of the episode, unless there is an applicable adjustment. For all subsequent episodes for beneficiaries who receive continuous home health care, the episodes will be paid at a 50/50-percentage payment split.

8 Physician Signature Requirements for the Split Percentage Payments HH A. Initial Percentage Payment If a physician-signed plan of care is not available at the beginning of the episode, the HHA may submit a RAP for the initial percentage payment based on physician verbal orders OR a referral prescribing detailed orders for the services to be rendered that is signed and dated by the physician. If the RAP submission is based on a physician's verbal orders, the verbal order must be recorded in the plan of care, include a description of the patient's condition and the services to be provided by the home health agency, and include an attestation (relating to the physician's orders and the date received per Code of Federal Regulation (CFR) 42 CFR ). The plan of care is copied and immediately submitted to the physician. A billable visit must be rendered prior to the submission of a RAP. The CMS has the authority to reduce or disapprove requests for anticipated payments in situations when protecting Medicare program integrity warrants this action. Since the request for anticipated payment is based on verbal orders and is not a Medicare claim for purposes of the Act (although it is a claim for purposes of Federal, civil, criminal, and administrative law enforcement authorities, including but not limited to the Civil Monetary Penalties Law, Civil False Claims Act, and the Criminal False Claims Act), the request for anticipated payment will be canceled and recovered unless the claim is submitted within the greater of 60 days from the end of the episode or 60 days from the issuance of the request for anticipated payment. B. Final Percentage Payment The plan of care must be signed and dated by a physician who meets the certification and recertification requirements of 42 CFR before the claim for each episode for services is submitted for the final percentage payment. Any changes in the plan of care must be signed and dated by a physician Low Utilization Payment Adjustment (LUPA) (Rev. 139, Issued: , Effective: , Implementation: ) An episode with four or fewer visits is paid the national per visit amount by discipline adjusted by the appropriate wage index based on the site of service of the beneficiary. Such episodes of four or fewer visits are paid the wage-adjusted per visit amount for each of the visits rendered instead of the full episode amount. The national per visit amounts by discipline (skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services) are updated and published annually by the applicable market basket for each visit type.

9 Beginning in CY 2008, to offset the full cost of longer, initial visits in some LUPA episodes, CMS has modified the LUPA by increasing the payment by an add-on amount for LUPAs that occur as the only episode or the initial episode during a sequence of adjacent episodes. The initial LUPA add-on amount was $92.63 for CY 2008, and is updated annually by the home health market basket update percentage, plus or minus any percentage mandated by Congress Partial Episode Payment (PEP) Adjustment (Rev. 139, Issued: , Effective: , Implementation: ) A. PEP Adjustment Criteria The PEP adjustment accounts for key intervening events in a patient's care defined as: A beneficiary elected transfer; or A discharge resulting from the beneficiary reaching the treatment goals in the original plan of care and returning to the same HHA during the 60-day episode. The intervening event defined as the beneficiary elected transfer or discharge and return to the same HHA during the 60-day episode warrants a new 60-day episode for purposes of payment. A start of care OASIS assessment and physician certification of the new plan of care are required. When a new 60-day episode begins due to the intervening event of the beneficiary elected transfer or discharge and return to the same HHA during the 60-day episode, the original 60-day episode is proportionally adjusted to reflect the length of time the beneficiary remained under the agency's care prior to the intervening event. Home health agencies have the option to discharge the patient within the scope of their own operating policies. However, an HHA discharging a patient as a result of hospital (SNF or rehab facility) admission with the patient returning to home health services at the same HHA during the 60-day episode will not be recognized by Medicare as a discharge for billing and payment purposes, and thus a Partial Episode Payment (PEP) adjustment would not apply. An intervening hospital (SNF or rehab facility) stay will result in a full 60-day episode spanning the start of care date prior to the hospital (SNF or rehab facility) admission, through and including the days of the hospital admission, and ending 59 days after the original start of care date. B. Methodology Used to Calculate PEP Adjustment The PEP adjustment for the original 60-day episode is calculated to reflect the length of time the beneficiary remained under the care of the original HHA based on the first billable visit date through and including the last billable visit date. The PEP adjustment is calculated by determining the actual days served by the original HHA (first billable visit date through and including last billable visit date as a proportion of 60 multiplied by the original 60-day episode payment).

10 C. Application of Therapy Threshold to PEP Adjusted Episode The therapy threshold item included in the case-mix methodology used in home health PPS is not combined or prorated across episodes. Each episode whether full or proportionately adjusted is subject to the therapy threshold for purposes of case-mix adjusting the payment for that individual patient's resource needs. D. Common Ownership Exception to PEP Adjustment If an HHA has a significant ownership as defined in 42 CFR , then the PEP adjustment would not apply in those situations of beneficiary elected transfer. Those situations would be considered services provided under arrangement on behalf of the originating HHA by the receiving HHA with the ownership interest until the end of the episode. The common ownership exception to the transfer PEP adjustment does not apply if the beneficiary moved out of their MSA or non-msa during the 60-day episode before the transfer to the receiving HHA. E. Beneficiary Elected Transfer Verification In order for a receiving HHA to accept a beneficiary elected transfer, the receiving HHA must document that the beneficiary has been informed that the initial HHA will no longer receive Medicare payment on behalf of the patient and will no longer provide Medicare covered services to the patient after the date of the patient's elected transfer in accordance with current patient rights requirements at 42 CFR (e). The receiving HHA must also document in the record that it accessed the regional home health intermediaries (RHHI) inquiry system to determine whether or not the patient was under an established home health plan of care and it must contact the initial HHA on the effective date of transfer. In the rare circumstance of a dispute between HHAs, the RHHI is responsible for working with both HHAs to resolve the dispute. If the receiving HHA can provide documentation of its notice of patient rights on Medicare payment liability provided to the patient upon transfer and its contact of the initial HHA of the transfer date, then the initial HHA will be ineligible for payment for the period of overlap in addition to the appropriate PEP adjustment. If the receiving HHA cannot provide the appropriate documentation, the receiving HHA's RAP and/or final claim will be cancelled, and full episode payment will be provided to the initial HHA. For the receiving HHA to properly document that it contacted the initial HHA on the effective date of transfer it must maintain similar information as the initial HHA, including the same basic beneficiary information, personnel contacted, dates and times. The initial HHA must also properly document that it was contacted and it accepted the transfer. Where it disputes a transfer, the initial HHA must call its RHHI to resolve the dispute. The RHHI is responsible for working with both HHAs to resolve the dispute Outlier Payments (Rev. 139, Issued: , Effective: , Implementation: )

11 When cases experience an unusually high level of services in a 60-day period, Medicare systems will provide additional or "outlier" payments to the case-mix and wage-adjusted episode payment. Outlier payments can result from medically necessary high utilization in any or all-home health service disciplines. CMS makes outlier payments when the cost of care exceeds a threshold dollar amount. The outlier threshold for each case-mix group is the episode payment amount for that group or the PEP adjustment amount for the episode, plus a fixed dollar loss amount, which is the same for all case-mix groups. The outlier payment is a proportion of the amount of imputed costs beyond the threshold. CMS calculates the imputed cost for each episode by multiplying the national per visit amount of each discipline by the number of visits in the discipline and computing the total imputed cost for all disciplines. If the imputed cost for the episode is greater than the sum of the case-mix and wage-adjusted episode payment plus the fixed dollar loss amount (the outlier threshold), a set percentage (the loss sharing ratio) of the difference between the imputed amount and outlier threshold will be paid to the HHA as a wageadjusted outlier payment in addition to the episode payment. The amount of the outlier payment is determined as follows: 1. Calculate the case-mix and wage-adjusted episode payment (including nonroutine supplies (NRS)); 2. Add the wage-adjusted fixed dollar loss amount. The sum of steps 1 and 2 is the outlier threshold for the episode; 3. Calculate the wage-adjusted imputed cost of the episode by first multiplying the total number of visits for each home health discipline by the national per visit amounts, and wage-adjusting those amounts. Sum the per discipline wageadjusted imputed amounts to yield the total wage-adjusted imputed cost for the episode; 4. Subtract the total imputed cost for the episode (total from Step 3) from the sum of the case-mix and wage-adjusted episode payment and the wage-adjusted fixed dollar loss amount (sum of Steps 1 and 2 - outlier threshold); 5. Multiply the difference by the loss sharing ratio; and 6. That total amount is the outlier payment for the episode. Effective January 1, 2010, an outlier cap precludes any HHA from receiving more than 10 percent of their total home health payment in outliers Discharge Issues (Rev. 139, Issued: , Effective: , Implementation: ) A. Hospice Election Mid-Episode

12 If a patient elects hospice before the end of the episode and there was no PEP or LUPA adjustment, the HHA will receive a full episode payment. Home health PPS does not change the current rules that permit a hospice patient to receive home health services for a condition unrelated to his/her reason for hospice election. Consistent with all episodes in which a patient receives four or fewer visits, the episode with four or fewer visits in which a patient elects hospice would be paid at the low utilization payment adjusted amount. B. Patient's Death The documented event of a patient's death would result in a full episode payment, unless the death occurred in a low utilization payment adjusted episode. Consistent with all episodes in which a patient receives four or fewer visits, if the patient's death occurred during an episode with four or fewer visits, the episode would be paid at the low utilization payment adjusted amount. In the event of a patient's death during an adjusted episode, the total adjusted episode would constitute the full episode payment. However, the HHA is not constrained to bill for a higher case-mix group if the net effect is a lower payment for the episode than if the adjustment had not occurred. C. Patient is No Longer Eligible for Home Health (e.g., no longer homebound, no skilled need). If the patient is discharged because he or she is no longer eligible for the Medicare home health benefit and has received more than four visits, then the HHA would receive full episode payment. However, if the patient becomes subsequently eligible for the Medicare home health benefit during the same 60-day episode and later transferred to another HHA or returned to the same HHA, then the latter situation would result in a PEP adjustment. D. Discharge Due to Patient Refusal of Services or is a Documented Safety Threat, Abuse Threat or is Noncompliant. If the patient is discharged because he or she refuses services or becomes a documented safety, abuse, or noncompliance discharge and has received more than four visits, then the HHA would receive full episode payment unless the patient becomes subsequently eligible for the Medicare home health benefit during the same 60-day episode and later transferred to another HHA or returned to the same HHA, then the latter situation would result in a PEP adjustment. E. Patient Becomes Managed Care Eligible Mid-Episode If a patient's enrollment in a Medicare Advantage (MA) plan becomes effective mid episode, the 60-day episode payment will be made proportionally adjusted with a PEP adjustment since the patient is receiving coverage under MA. Beginning with the effective date of enrollment, the MA plan will receive a capitation payment for covered services.

13 F. Submission of Final Claims Prior to the End of the 60-day Episode The claim may be submitted upon discharge before the end of the 60-day episode. However, subsequent adjustments to any payments based on the claim may be made due to an intervening event resulting in a PEP adjustment or other adjustment. G. Patient Discharge and Financial Responsibility for Part B Bundled Medical Supplies and Services As discussed in detail under 10.11, below, the law governing the Medicare home health PPS requires the HHA to provide all bundled home health services (except DME) either directly or under arrangement while a patient is under a home health plan of care during an open episode. The HHA is responsible for providing all covered home health services (except DME) either directly or under arrangement while a patient is under a home health plan of care during an open episode. Once the patient is discharged, the HHA is no longer responsible for providing home health services including the bundled Part B medical supplies and therapy services. H. Discharge Issues Associated With Inpatient Admission Overlapping Into Subsequent Episodes 1. If a patient is admitted to an inpatient facility and the inpatient stay overlaps into what would have been the subsequent episode and there is no reassessment or recertification of the patient, then the certification begins with the new start of care date after inpatient discharge Consolidated Billing (Rev. 139, Issued: , Effective: , Implementation: ) For individuals under a home health plan of care payment for all services and supplies, with the exception of the osteoporosis drugs and DME, is included in the PPS episodic rate. HHAs must provide the covered home health services (except DME) either directly or under arrangement, and must bill for such covered home health services. Payment must be made to the HHA. A. Home Health Services Subject to Consolidated Billing Requirements The home health services included in the consolidated billing governing home health PPS are: Part-time or intermittent skilled nursing services; Part-time or intermittent home health aide services;

14 Physical therapy; Speech-language pathology services; Occupational therapy; Medical social services; Routine and nonroutine medical supplies; Covered osteoporosis drug as defined in 1861(kk) of the Act, but excluding other drugs and biologicals; Medical services provided by an intern or resident-in-training of the program of the hospital in the case of an HHA that is affiliated or under common control with a hospital with an approved teaching program; and Home health services defined in 1861(m) provided under arrangement at hospitals, SNFs, or rehabilitation centers when they involve equipment too cumbersome to bring to the home or are furnished while the patient is at the facility to receive such services. B. Medical Supplies The law requires all medical supplies (routine and nonroutine) bundled to the agency while the patient is under a home health plan of care. The agency that establishes the episode is the only entity that can bill and receive payment for medical supplies during an episode for a patient under a home health plan of care. Both routine and nonroutine medical supplies are included in the base rates for every Medicare home health patient regardless of whether or not the patient requires medical supplies during the episode. Due to the consolidated billing requirements, CMS provided additional amounts in the base rates for those nonroutine medical supplies that have a duplicate Part B code that could have been unbundled to Part B prior to PPS. See 50.4 for detailed discussion of medical supplies. Medical supplies used by the patient, provider, or other practitioners under arrangement on behalf of the agency (other than physicians) are subject to consolidated billing and bundled to the HHA episodic payment rate. Once a patient is discharged from home health and not under a home health plan of care, the HHA is not responsible for medical supplies. The DME, including supplies covered as DME, are paid separately from the PPS rates and are excluded from the consolidated billing requirements governing PPS. The determining factor is the medical classification of the supply, not the diagnosis of the patient. For example, infusion therapy will continue to be covered under the DME

15 benefit separately paid from the PPS rate and excluded from the consolidated billing requirements governing PPS. The DME supplies that are currently covered and paid in accordance with the DME fee schedule as category SU are billed under the DME benefit and not included in the bundled HHA episodic payment rate. The HHAs are not required to do consolidated billing of SU supplies. Osteoporosis drugs are included in consolidated billing under the home health benefit. However, payment is not bundled into the episodic payment rate. The HHAs must bill for osteoporosis drugs in accordance with billing instructions. Payment is in addition to the episodic payment rate. C. Relationship Between Consolidated Billing Requirements and Part B Supplies and Part B Therapies Included in the Baseline Rates That Could Have Been Unbundled Prior to PPS That No Longer Can Be Unbundled. The HHA is responsible for the services provided under arrangement on their behalf by other entities. Covered home health services at 1861(m) of the Act (except DME) are included in the baseline PPS rates and subject to the consolidated billing requirements while the patient is under a plan of care of the HHA. The time the services are bundled is while the patient is under a home health plan of care. Physician services or nurse practitioner services that are bundled into the physician fee schedule payments are not recognized as a home health service included in the PPS rate. Supplies incident to a physician service or related to a physician service billed to the carrier are not subject to the consolidated billing requirements. The physician would not be acting as a supplier billing the DMERC in this situation. Therapies (physical therapy, occupational therapy, and speech-language pathology services) are covered home health services that are included in the baseline rates and subject to the consolidated billing requirements. In addition to therapies that had been paid on a cost basis under home health, CMS has included in the rates additional amounts for Part B therapies that could have been unbundled prior to PPS. These therapies are subject to the consolidated billing requirements. There are revenue center codes that reflect the ranges of outpatient physical therapy, occupational therapy, and speechlanguage pathology services and HCPCS codes that reflect physician supplier codes that are physical therapy, occupational therapy, and speech-language pathology services by code definition and are subject to the consolidated billing requirements. Therefore, the above-mentioned therapies must be provided directly or under arrangement on behalf of the HHA while a patient is under a home health plan of care cannot be separately billed to Part B during an open 60-day episode. D. Freedom of Choice Issues A beneficiary exercises his or her freedom of choice for the services under the home health benefit listed in 1861(m) of the Act, including medical supplies, but excluding DME covered as a home health service by choosing the HHA. Once a home health

16 patient chooses a particular HHA, he or she has clearly exercised freedom of choice with respect to all items and services included within the scope of the Medicare home health benefit (except DME). The HHA's consolidated billing role supersedes all other billing situations the beneficiary may wish to establish for home health services covered under the scope of the Medicare home health benefit during the certified episode. E. Knowledge of Services Arranged for on Behalf of the HHA The consolidated billing requirements governing home health PPS requires that the HHA provide all covered home health services (except DME) either directly or under arrangement while a patient is under a home health plan of care. Providing services either directly or under arrangement requires knowledge of the services provided during the episode. In addition, in accordance with current Medicare conditions of participation and Medicare coverage guidelines governing home health, the patient's plan of care must reflect the physician ordered services that the HHA provides either directly or under arrangement. An HHA would not be responsible for payment in the situation in which they have no prior knowledge (unaware of physicians orders) of the services provided by an entity during an episode to a patient who is under their home health plan of care. An HHA is responsible for payment in the situation in which services are provided to a patient by another entity, under arrangement with the HHA, during an episode in which the patient is under the HHA's home health plan of care. However, it is in the best interest of future business relationships to discuss the situation with any entity that seeks payment from the HHA during an episode in an effort to resolve any misunderstanding and avoid such situations in the future Change of Ownership Relationship to Episodes Under PPS (Rev. 139, Issued: , Effective: , Implementation: ) A. Change of Ownership With Assignment When there is a change of ownership and the new owner accepts assignment of the existing provider agreement, the new owner is subject to all the terms and conditions under which the existing agreement was issued. The provider number remains the same if the new HHA owner accepts assignment of the existing provider agreement. As long as the new owner complies with the regulations governing home health PPS, billing, and payment for episodes with applicable adjustments for existing patients under an established plan of care will continue on schedule through the change in ownership with assignment. The episode would be uninterrupted spanning the date of sale. The former owner is required to file a terminating cost report. Instructions regarding when a cost report is filed are in the Provider Reimbursement Manual, Part 1, B. Change of Ownership Without Assignment When there is a change of ownership, and the new owner does not take the assignment of the existing provider agreement, the provider agreement and provider number of the former owner is terminated. The former owner will receive partial episode payment

17 adjusted payments in accordance with the methodology set forth in the Medicare Claims Processing Manual, Chapter 10, "Home Health Agency Billing," 40.2, and 42 CFR , based on the last billable visit date for existing patients under a home health plan of care ending on or before the date of sale. The former owner is required to file a terminating cost report. The new owner cannot bill Medicare for payment until the effective date of the Medicare approval. The new HHA will not be able to participate in the Medicare program without going through the same process as any new provider, which includes an initial survey. Once the new owner is Medicare-approved, the HHA may start a new episode for purposes of payment, OASIS assessment, and certification of the home health plan of care for all new patients in accordance with the regulations governing home health PPS, effective with the date of the new provider certification. C. Change of Ownership - Mergers The merger of a provider corporation into another corporation constitutes a change of ownership. For information on specific procedures, refer to Pub , State Operations Manual, chapter 2, section Conditions To Be Met for Coverage of Home Health Services A3-3116, HHA-203 Medicare covers HHA services when the following criteria are met: 1. The person to whom the services are provided is an eligible Medicare beneficiary; 2. The HHA that is providing the services to the beneficiary has in effect a valid agreement to participate in the Medicare program; 3. The beneficiary qualifies for coverage of home health services as described in 30; 4. The services for which payment is claimed are covered as described in 40 and 50; 5. Medicare is the appropriate payer; and 6. The services for which payment is claimed are not otherwise excluded from payment Reasonable and Necessary Services A HHA Background

18 A A, HHA-203.1A In enacting the Medicare program, Congress recognized that the physician would play an important role in determining utilization of services. The law requires that payment can be made only if a physician certifies the need for services and establishes a plan of care. The Secretary is responsible for ensuring that Medicare covers the claimed services, including determining whether they are "reasonable and necessary." Determination of Coverage (Rev. 179, Issued: , Effective: , Implementation: ) A B, HHA B The intermediary's decision on whether care is reasonable and necessary is based on information reflected in the home health plan of care, the OASIS as required by 42 CFR or a medical record of the individual patient. Medicare does not deny coverage solely on the basis of the reviewer's general inferences about patients with similar diagnoses or on data related to utilization generally, but bases it upon objective clinical evidence regarding the patient's individual need for care. Coverage of skilled nursing care or therapy to perform a maintenance program does not turn on the presence or absence of a patient s potential for improvement from the nursing care or therapy, but rather on the patient s need for skilled care. Skilled care may be necessary to improve a patient s current condition, to maintain the patient s current condition, to prevent or slow further deterioration of the patient s condition Impact of Other Available Caregivers and Other Available Coverage on Medicare Coverage of Home Health Services A , HHA Where the Medicare criteria for coverage of home health services are met, patients are entitled by law to coverage of reasonable and necessary home health services. Therefore, a patient is entitled to have the costs of reasonable and necessary services reimbursed by Medicare without regard to whether there is someone available to furnish the services. However, where a family member or other person is or will be providing services that adequately meet the patient's needs, it would not be reasonable and necessary for HHA personnel to furnish such services. Ordinarily it can be presumed that there is no able and willing person in the home to provide the services being rendered by the HHA unless the patient or family indicates otherwise and objects to the provision of the services by the HHA, or unless the HHA has first hand knowledge to the contrary. EXAMPLE 1: A patient who lives with an adult daughter and otherwise qualifies for Medicare coverage of home health services, requires the assistance of a home health aide for bathing and assistance with an exercise program to improve endurance. The daughter is unwilling to

19 bathe her elderly father and assist him with the exercise program. Home health aide services would be reasonable and necessary. Similarly, a patient is entitled to have the costs of reasonable and necessary home health services reimbursed by Medicare even if the patient would qualify for institutional care (e.g., hospital care or skilled nursing facility care). EXAMPLE 2: A patient who is being discharged from a hospital with a diagnosis of osteomyelitis and requires continuation of the I.V. antibiotic therapy that was begun in the hospital was found to meet the criteria for Medicare coverage of skilled nursing facility services. If the patient also meets the qualifying criteria for coverage of home health services, payment may be made for the reasonable and necessary home health services the patient needs, notwithstanding the availability of coverage in a skilled nursing facility. Medicare payment should be made for reasonable and necessary home health services where the patient is also receiving supplemental services that do not meet Medicare's definition of skilled nursing care or home health aide services. EXAMPLE 3: A patient who needs skilled nursing care on an intermittent basis also hires a licensed practical (vocational) nurse to provide nighttime assistance while family members sleep. The care provided by the nurse, as respite to the family members, does not require the skills of a licensed nurse (as defined in 40.1) and therefore has no impact on the beneficiary's eligibility for Medicare payment of home health services even though another third party insurer may pay for that nursing care Use of Utilization Screens and "Rules of Thumb" A , HHA Medicare recognizes that determinations of whether home health services are reasonable and necessary must be based on an assessment of each beneficiary's individual care needs. Therefore, denial of services based on numerical utilization screens, diagnostic screens, diagnosis or specific treatment norms is not appropriate Conditions Patient Must Meet to Qualify for Coverage of Home Health Services A3-3117, HHA-204, A To qualify for the Medicare home health benefit, under 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, a Medicare beneficiary must meet the following requirements:

20 Be confined to the home; Under the care of a physician; Receiving services under a plan of care established and periodically reviewed by a physician; Be in need of skilled nursing care on an intermittent basis or physical therapy or speech-language pathology; or Have a continuing need for occupational therapy. For purposes of benefit eligibility, under 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, "intermittent" means skilled nursing care that is either provided or needed on fewer than 7 days each week or less than 8 hours of each day for periods of 21 days or less (with extensions in exceptional circumstances when the need for additional care is finite and predictable). A patient must meet each of the criteria specified in this section. Patients who meet each of these criteria are eligible to have payment made on their behalf for services discussed in 40 and Confined to the Home A , HHA Patient Confined to the Home (Rev. 172, Issued: , Effective: , Implementation: ) For a patient to be eligible to receive covered home health services under both Part A and Part B, the law requires that a physician certify in all cases that the patient is confined to his/her home. For purposes of the statute, an individual shall be considered confined to the home (homebound) if the following two criteria are met: 1. Criteria-One: The patient must either: - Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence OR - Have a condition such that leaving his or her home is medically contraindicated.

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